The worst global slump in auto sales in 50 years has led to car makers in Europe, Japan and the United States to seek assistance from their governments.
Car sales have not declined this sharply since the recession year of 1958. In the United States, sales in February were down 41 percent from the same month last year. Similar declines were registered in Western Europe.
Ellen Hughes-Cromwick is chief economist at Ford.
"The [American] consumer is not only being hit with a constrained credit market, but they're also very concerned about their current and future financial condition as reflected in [consumer] sentiment surveys," said Ellen Hughes-Cromwick. "And as well, they're also being adversely affected by reductions in their household net wealth. All of those factors combined with the housing crisis have led to a deterioration in sales."
To survive the market downturn, two of America's major car companies, General Motors and Chrysler, received government loans of $17 billion in December. Now they say they need $21 billion more - a request that is being examined by President Barack Obama's automotive task force. A decision is expected by the end of the month.
European car companies are also seeking government assistance. France is lending seven billion dollars to its two major car makers. And General Motors, or G.M., is seeking help from the German and Swedish governments to keep its Opel and Saab subsidiaries in business. In Japan, Toyota, which last year overtook GM as the world's biggest car company, is seeking a $2-billion government loan for its credit operation.
The financial losses at General Motors have fanned investor worries that the company could be forced into bankruptcy. G.M.'s share price has fallen to barely more than $2 and the company is losing $84 million every day. Analysts warn that a GM bankruptcy would be catastrophic and result in the loss of 900,000 U.S. jobs.
Economic forecasters are not providing any reason for the automakers to be optimistic. Most say the economic downturn is continuing with no sign of rebounding business or consumer confidence.